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Brakes on net speed

By Joshua Gans - posted Monday, 25 June 2007


Our governments need to solve this or we will have a large garage with only a little car to park in it. What's more, when there isn't an international issue there can be domestic limits.

Telstra claim their NextG network is an existing substitute for what Opel (the Government's subsidised regional provider) will do.

But Telstra limits use on that network to a fraction of what would occur on wired ones.

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I have such a connection when I am out and about - it's fast but I'm constantly worried about downloading too much before I reach my 200Mb monthly limit (at a cost of about $60 a month).

Which brings me to the third issue: if you want to get fast broadband cheaply without lots of public money, then you need competition. And no politician has said how they will resolve that.

Yes, both sides have promised tenders but, in either case, we will only likely have two serious contenders. Is that really enough for what is supposedly a vital piece of infrastructure?

More critically, we have the on-going fact that Telstra owns the last mile to the consumer. Either the new network is given to Telstra or politicians have to deal with Telstra to allow someone else access.

Telstra knows this, which, in part, explains its confidence in coming out ahead on broadband.

The hard decision on broadband has yet to be taken. Both Labor and the Coalition promise to do something about the issue of competition and regulation but neither has specified what. The Australian public should be nervous about whether either has the power to do so.

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This is the roadblock to a national broadband upgrade. If you don't specify what you will do, you have a promise that is unfunded by real decisions. The risk is that lots more public money will be required to fulfil that funding gap.

In my mind, I would prefer that our politicians abandon the promise that everyone needs high speed broadband. Instead, we should encourage local solutions so localities that really want high-speed broadband can make the investments and encourage the competition to get it.

Unfortunately, even this requires eventually dealing with, and not ignoring, the elephant in the middle of the room: Telstra.

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First published in The Courier-Mail on June 20, 2007.



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About the Author

Joshua Gans is an economics professor at Melbourne Business School. He writes on these issues at economics.com.au.

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